Feb. 27 (Bloomberg) -- The European Union grain harvest is set to climb further as a plan to tie farmer payments to environmental goals keeps agricultural land in production, according to the European Commission.
A proposal to tie direct payments received by farmers to compliance with environmental targets can be satisfied with territory that’s already out of use, said Joao Pacheco, deputy director general for agriculture and rural development at the commission. The plan from the commission, the EU’s executive arm, calls for 7 percent of farmland to be crop-free.
“The 7 percent ecological focus area is a number, a percentage of the area that can be met by areas that today are already not in production,” Pacheco said in an interview in Brussels today. “I don’t see any problem for Europe to continue to be a large producer of cereals, in particular wheat. In our estimates, we will continue to grow grain production.”
The 27-nation EU was the world’s biggest wheat producer in the season that ended in June, according to the International Grains Council. The commission wants to link 30 percent of direct payments to farmers to meeting environmental goals as part of a reform of the bloc’s agricultural industry.
Some land would be set aside for ecological steps such as planting trees and hedges under the commission proposal. The environmental goal can be satisfied by areas such as irrigation canals and protection areas near rivers, according to Pacheco.
“There are a range of possibilities to meet the 7 percent target,” he said, referring to the so-called greening proposal. “We will now pay to keep elements that are important for biodiversity. We are very competitive in wheat, will continue to be, and will most likely increase our production.”
The greening plan may take 3 million hectares (7.4 million acres) of land out of grain production, Oliver Balkhausen, deputy head of economics at Hamburg-based grain trader Alfred C. Toepfer International GmbH, said in November. The proposal might cut harvests by 14 million to 15 million metric tons, he said.
The EU produced 130.6 million tons of wheat in the 2012-13 season, according to figures from the London-based council.
The greening plan is important for improving the quality of soils in the EU, according to Pacheco. About 45 percent of the bloc’s soils face quality issues, including a lack of organic matter, he said.
“Even if 7 percent of the area were to be taken out of production, output would only fall by 3 percent,” Pacheco said, referring to farm production. “But this won’t happen.”
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